Three Ventura residents sentenced to federal prison for fraud

Three Ventura residents were sentenced to federal prison Monday for fraud that cost hundreds of investors across the U.S. more than $27 million, federal prosecutors said.

Two brothers and a woman fraudulently raised money by telling investors their funds would buy Ad Toppers, a video device that can display advertisements on ATMs or vending machines, prosecutors said.

Alan G. Flesher, 65, the leader of the group, was sentenced to 17 years in prison, officials said. Wayne D. Flesher, 62, was sentenced to six years, and Nancy Carol Khalial, 65, to four years, authorities said.

All were sentenced by U.S. District Judge Terry J. Hatter Jr., who also ordered the defendants collectively to pay nearly $27.4 million in restitution.

All three had pleaded guilty to 17 counts of mail fraud and admitted they used Oxnard companies called Unlimited Cash Inc. and Douglas Network Enterprises Inc. to run the operation, prosecutors said.

The defendants told victims that Unlimited Cash would sell Ad Toppers and ATMs and that Douglas Network would place the devices in commercial locations, prosecutors said.

Victims were told they would get income from ATM transaction fees and advertisement revenue generated by Ad Toppers, authorities said. The operation took in about $41 million from about 790 investors from 2001 to 2005. But the defendants did not place most of the ATMs, and Ad Toppers sold to investors, prosecutors said.

“In other words, defendants sold nonexistent ATMs and Ad Toppers and paid the later investors with the funds from the earlier investors,” prosecutors wrote in court documents.

The defendants spent the majority of investor funds on personal expenses, personal salaries, sales commissions and other payments.

The FBI and Postal Inspection Service conducted the investigation, with help from the Securities and Exchange Commission.